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Tunde Ogunnaike, Managing director of Oando E&P Limited, the Nigerian independent, acknowledges that there’s a bit of impatience, among oil industry watchers, about his company’s pace of delivering the work programmes proposed to turn its assets into cash generating engines.

Why, for instance, has it not acquired a single kilometre of seismic data in the Oil Prospecting Lease OPL 278, since it won it in 2006? Its technical operatorship of Akepo, which was agreed upon in November 2008, is coming very slowly and things have been quiet even in OPL 236, in the south east of the Niger Delta basin.

Ogunnaike. a Shell scholar who comes across as extremely self assured, responds with a gush of words and almost turns the conversation into a monologue. “The story of OPL 278 is sad”, he laments. It’s right at the mouth of the Sombreiro river. That is at the heart of the Niger Delta crisis. We have been trying to shoot seismic for the last 18 months. Most seismic contractors don’t want to shoot for you. We have gone through the entire process with NAPIMS (the government company which approves work programmes for E&P firms). We were ready.

We are not the only one. If you go to OPL 282. which Agip is operating, nobody wants to do it. We are hoping that this (government’s) Amnesty with militants) will help relieve the security constraints and we can go back and do business”.

Even with all these handicaps, Ogunnaike announces with a flourish, Oando E&P had set a target of producing 100,000barrels of oil equivalent per day (BOEPD) by 2013. “We will get to the 100,000BOEPD through acquisitions. We are looking at several blocks in the Niger Delta. We note the tendency of the lOCs to move away from onshore to deepwater. We are basically saying that we are local boys and we can operate onshore. We are actually working to raise finance for those acquisitions.

“The rig for Akepo is coming in on Saturday”, he tells me disarmingly.. “We signed a contract with Noble; we’re going into production by early next year (2010). We are doing an FDP(Field Development Plan) right now, to firm up additional wells. We will be in production and, at the same time, getting ready to drill follow ups. We take seriously the DPR threat that by November (2009) they will take the license from you”.

Then as if acknowledging that I was holding Oando responsible for the slow pace of delivery of first oil in the field, he adds: “Don’t forget that we are not the operators. We’re just technical partners. Akepo, for me, is to demonstrate our technical capability. People often write off Nigerian independents as mere passive partners in projects. and that they don’t do the technical work”.

Mr Ogunnaike certainly wants to make me apologise for my assumptions: “We have production in deep offshore that Agip operates. We take Agip up on technical issues and they listen to us. For Akepo, the operator has delegated some of the functions to us as technical partners. And that’s going well. “The portfolio we have now cannot give us 100,000BOEPD. We need more acquisitions. We’ve recently acquired Equator. We bought the company. We are close to 9O° take over of the entire company now. That includes all its assets. They have assets in the JDZ, and rights to two blocks in the EEZ. They have stakes in OPLs 321 and 323. Equator has stake in the Bilabri block as well”.

When I have space to chip in, I explain that I didn’t think any of the assets that Oando has at the moment can deliver even half of 100,000BOEPD, even by 2015.’ Ogunnaike admits. “When we say we’re looking for acquisition, we are actually looking for producing assets or assets that are close to production. They cost a lot more but your risks are better managed.

“If you go by the current mood in the country, the government is keen to get indigenous companies more involved. Some 95% of the country’s crude oil production is by lOCs now, but the government would rather have more Nigerian companies producing.

“We see ourselves, first among equals when you want to assess oil companies. We’ve done enough to deserve attention when it comes to indigenous companies. We don’t play the game of let someone come and carry us. The last game we played, which was buying into Shell assets in Agip operated deepwater acreage, we actually raised close to $700Million, for more than 400o stake in each of the two licenses, but Agip played the game and we ended up with 15°o, paying about $200Million. Our international financiers liked the experience of that process with us and are willing to partner with us to do more”.

Now that I’ve gotten so much information about Oando, I ask Mr Ogunnaike what he is doing working for a start up like Oando E & P Ltd. He had spent quite a number of Years working for Shell.

He responds that he didn’t start out looking out to work for another company after his 30 year career with Shell. He happened to be headhunted and he thought it wasn’t a bad idea. “I thought it was a fantastic challenge doing something for the local content. It’s been a very interesting challenge”.

It so happened that the company was just concluding the deal with Agip when he came in, but he has been superintending the rewards and he a. excited by the returns. One of the blocks is producing the Abo field. The other has a discovery called Oberan. “Even in the producing block, there’s another prospect, Abo South,that we’re looking at drilling before the end of 2009, or early 2010. It’s a separate field, but related. The probability of success is almost 100”o. Wed drill that and tie it to the FPSO and maintain the plateau for Abo production. which is currently doing about 29,000BOPD. It declined from about 32,000BOPD this year. The Abo South drilling should arrest that decline’.

Although the fields that are most readily available for an investor in the Nigerian portfolio are those that are marginal, either in relative (geographical location, nearness to producing facility) or absolute terms(size), Ogunnaike is not bullish on marginal fields.

“Personally, as a petroleum engineer, the effort you put in to develop the marginal field is the same that you put into developing the bigger field. It’s the same discipline. It’s the same quality check, and you still go through all the hassle of community obstructions. If you are going to be a 10.000BOPD company, that’s fine. But if you are looking for more, you should be going for a bigger game”.

Ogunnaike has been privileged working in the plummest job in the Nigerian economy for all his life. He won the Shell scholarship to study in the UK straight from the prestigious Government College Ibadan in 1974 and got some of the best jobs all through his career with Nigeria’s largest oil and gas producer.

I ask him what he considers the most exciting phase of his career with Shell. He has some interesting examples “There was considerable challenge with procurement; we were having people who weren’t ordering the right things. I had a two year stint in procurement; five years after I joined”. He returned to petroleum engineering, did production technology for a while. Then an opening came up in Economics and Planning in the Western Division.

He lights up.

“That job provided, for me, an overview of the business. It showed me how the money is made in this business. After a while, he left for cross posting in the UK, where his job was to justify a lot of the exploration wells that were being drilled in the Central North Sea. That was for four years. He returned blocks not to Economics, not to Petroleum Engineering, but to production. “I was in charge of production planning and programming, which I find very interesting”.

As community disturbances heightened the anxiety about safety of lives and limbs in the Niger Delta basin in the earlier five years of this decade, Ogunnaike got tired of staying in Warn, the second largest city in the region. He wanted to go to Lagos. The only job available was in SNEPCO, (the Shell Nigeria subsidiary involved in deepwater and frontier activity). “I came to SNEPCO to head economics and planning”, he recalls. He was the Petroleum Engineering Manager for Bonga at the time that this Nigerian flagship deepwater field was getting close to coming on stream .”I had a team set up in Houston, where most of the work was being done. That was where we trained the operators”. He sees that as perhaps the signal point of his career: coming to see Bonga doing 200,000BOPD “For most of my working life with Shell, we were seeing wells doing 2,000 to 4,000BOPD. In Bonga, we are seeing wells doing 30,000BOPD.” His very last job for Shell was as General Manager Commercial Operations for Africa.

I ask him whether he didn’t see his Oando E&P as top heavy, with five or so geologists and petroleum engineers who’d spent over 15 years in the industry and hardly any young technical personnel who is learning the ropes. When as he says, the Oando team challenges Agip on technical issues, where are the young Nigerian petroleum professionals to learn from the challenge? Ogunnaike’s response is to open a floodgate of information about Oando’s capacity building exercise. “You need to build that capacity gradually, not to flood the place with engineers and geologists when you don’t have the assets. They’d get bored. I have made a commitment that I want three petroleum engineers every year, feeding the funnel. Right now, I have got three petroleum engineers of not more than three years experience and I have got one with 12 years experience”. Oando itself, in broad terms, has a Graduate Training Programme, which started in 2009, where we take 20 graduates, fresh from the University, and get them through a grueling one year training programme, consisting, in part, of working in every Oando subsidiary, from far downstream (petroleum product retail) to the upstream (exploration and production). I ask him what his plans are after the magical 100, 000 BOEPD “If I take the company to 100, 000 BOEPD I’d consider leaving”.

The mad rush for Libya won’t translate to production increase in the next five years

North Africa Chart, NOVEMBER 2009

Crude oil production will decrease in North Africa in the next five years, according to analysis of global capital spend by Wood Mackenzie. An evaluation of projected global capital spend between 2009 and 2014 suggests a mild drop in net production growth in North Africa, although the decrease is nowhere near the sharp reduction in net output in Europe and, well, Latin America The report didn’t single out any specific North African country for assessment of relative increase or decrease in production, so it’s not clear whether a single country is responsible for growth or decrease. This contrasts with its assessment of Latin America, where it predicts a growth in Brazilian output. but explains that this growth is not sufficient to bring about a net increase in the regional crude oil output the time under review. The grim outlook of North African oil production is at odds with the growing presence of Western companies in the country since sanctions were lifted five years age. It also contrasts with the reported increase in discoveries in Egypt. What it means is that new oilfields are not being developed in Algeria. Libya. Egypt. Tunisia and Morocco. In specific detail, investment in exploration in Libya hasn’t delivered the sort of world class discoveries being encountered in the Gulf Of Guinea. notably Ghana and Angola. Egyptian discoveries may be many, but they are small. Algeria is growing its gas assets, but there are no new, major oilfield discoveries, let alone developments.

Goland has secured a jack up rig to drill the operated Oriri field in the shallow offshore Oil Mining Lease (OML) 88 in the south of Nigeria’s Niger Delta basin. The company’s effort to get the field on stream is buoyed by its new partnership with Nestoil, basically an oilfield engineering service firm, which has now become a financing partner in the development of Oriri. The field is one of the 24 marginal fields that the Nigerian government awarded to local independents in 2004, to boost indigenous capacity and increase the Nigerian percentage in the total volume of oil produced by the country. Goland’s progress on the field slowed down considerably after the initial technical partner, Vitoil, abandoned the project as a result of community disturbance. The company may be drilling Oriri 2, a new well, anytime soon.

The Chevron operated Agbami field offshore Nigeria reached peak production of 250,000 barrels per day in August 2009, or four months ahead of schedule. Commencing production in July 2008, the field contains an estimated 900 million barrels of oil equivalent of recoverable hydrocarbons, one of the largest discoveries to date in Nigeria. Agbami stretches across 45,000 acres and is located some 70 miles (113 kilometers) offshore the Niger Delta basin, straddling blocks OML 127 and 128. The field’s water depth is 4,500 feet (1,372 meters). The crude oil found in Agbami is light and sweet, with a 45-degree API gravity and no contaminants. Besides operator Chevron, other partners in Agbami are Petrobras, Nigerian National Petroleum Corp., Famfa Oil Ltd. and StatoilHydro ASA.

Africa’s large utility says that splitting the atom to generate electricity is far too expensive

Eskom, the South African power utility, has cancelled a $12 billion plan to build a nuclear plant as the credit freeze cuts financing.

Groups led by Areva, the world’s top supplier of nuclear reactors, and Toshiba’s Westinghouse Electric vied for the order. A global recession and an expected drop in energy demand is halting spending on projects from Canada to the Middle East and Africa.

“It’s too big, we can’t do it,” said Eskom spokesperson Fani Zulu. “The bidders were informed after we took the decision at a board meeting.”

Eskom is looking to borrow about $15 billion and is in talks with the World Bank for a loan of $5 billion. Its credit rating was cut by Moody’s Investors Services in 2008 after regulators allowed a 27 percent rise in electricity prices rather than 61 percent.

“We’re disappointed because we put a lot of work into the process, but we’re hopeful the South African government will remain committed to developing nuclear power,” said Jacques-Emmanuel Saulnier, a spokesperson for Areva in Paris, “If South Africa comes back to us, we’ll be there.”

The South African government immediately said it would still go ahead with installing Nuclear plants only that it would be at a slower pace and a scaled down version of what Eskom planned to do.

Eskom has not kept pace with local electricity demand and has restricted supply to firms including Anglo American and Xstrata.

The South African economy would probably grow at a slower pace than forecast by Eskom in the next five years, reducing power needs, said economist Jac Laubscher of Sanlam. “It’s not a train smash that they’ve cancelled the nuclear plan.”

The global recession and rising interest rates have reduced government projections,

with the economy now expected to expand three percent (3%) in 2009 and 4% in 2010.

The plan was also cancelled to ensure that Eskom’s ability to provide competitively priced energy was not jeopardised, the government said.

South Africa had planned to generate 20 000 megawatts from nuclear reactors by 2025, more than 10 times the current output. Power demand has risen by 50% since

1994, while government indecision postponed Eskom’s expansion.

The reasons for the pause were specific to South Africa, and did not reflect the general state in the nuclear industry, as shown by efforts by utilities in the UK and the US to build nuclear power plants, Areva’s Saulnier said.

Areva proposed two 1,650MW reactors, while Westinghouse offered to build three 1,140MW reactors.

South African owned construction groups Aveng and Murray & Roberts formed part of the groups bidding for the contract.

Electricite de France, the world’s top operator of atomic reactors, has South Africa among its priorities for nuclear expansion.

Still the country as a while remained “committed to nuclear power” to lessen the nation’s carbon footprint, Portia Molefe, director-general of the department of public enterprises said.

The World Bank has released $88Million to fund the construction of transmission lines to carry power from Mozambique’s Cahora Bassa Hydroelectric (HCB) dam to Malawi.

The power transmission line, to be erected as part of a Southern Africa Development Community (SADC) energy co-operation agreement, will have an average capacity rating of 300 megawatts (MW). The project is expected to get underway in 2009, following a public tender for the venture.

$43 million of the World Bank funding is to be used for projects in Mozambique and the remaining $45 million in Malawi. Mozambique will enlarge the Matambo substation (in Tete province) and build transmission lines to the Malawian frontier, from where Malawi’s utility will construct a line to the Phombeya region, site of a planned new substation being built as part of the same project.

The new infrastructure is expected to boost Mozambique’s position as one of the primary electricity exporters in the region at a time when the energy crisis demands increased cross-border cooperation to respond to potential negative impacts on development projects. Mozambique is aggressively investing in its power infrastructure to solve the regional power crunch, which had caused many mega-projects to grind to a halt.

The government has approved the construction of an $800 million power station in the northern province of Tete starting from 2009, to boost regional power supplies. Building another power station would increase Mozambique’s capacity to export electricity to other southern African countries, which have been affected by a power crisis.

HCB has exhausted the maximum capacity of 2,075 MW of power it could produce from its generators on the southern bank of the Cahora Bassa river.

HCB, which suffered decades of neglect and lack of investment, now provides 60% of its power to South Africa’s state utility Eskom and 35 percent to the Zimbabwe Electricity Supply Authority (ZESA).

Mozambique consumes the rest of the power. Only 15 percent of the country’s 20 million people have access to electricity.

Some of the best attended presentations at the most recent international convention of geoscientists were those on the recent pre-salt oil and gas discoveries in Brazil.

With newly discovered fields such as the Tupis field having estimated reserves of eight billion barrels oil, many explorationists could not help but speculate on the importance of this play on the presalt basins which are on the conjugate margins along the coast of West Africa from Gabon down to Namibia.

This pre-salt play may be especially relevant to Angola where the pre-salt sag basin is both extensive and has barely been penetrated by the drill bit.

Approximately 1,700 registrants from all over the globe were present at the 2008 International Convention and Exhibition of the American Association of Petroleum Geologists (AAPG), held October 26-29 2008, in the beautiful South African city of Cape Town.

For anyone focused on Africa oil and gas exploration and production, Cape Town was the place to be.

The theme of this conference was “African Energy: Global Impact”. An extensive programme of oral and poster paper presentations were held based on the following themes:

Deepwater Reservoir Systems – A Global Perspective, “Global Advances in Geosciences Next Generation Tools and Techniques,The New Business of Energy; Global Coal, CBM, Gas Hydrates,C02, RemediationGondwana and Pangean Petroleum Systems: Africa, Middle East, South Atlantic, Caspian, Mediterranean, Arctic and Asia-Pacific. A wide variety of pre-conference and post- conference geological field trips were held in the general Cape Town area as well as further away to the Karoo Basin of South Africa and the Zerrissene Turbidite System in southern Namibia. One of the outstanding opportunities at this particular conference was for geoscientists to be able to view approximately 450 meters of turbidite drill cores from South Africa and Angola. PetroSA provided representative cores of all sedimentary facies from the Bredasdorp Basin, offshore South Africa. TOTAL and Chevron were able to obtain Angola government approval as well as their partners’ approvals to show many meters of turbidite channels cores from deepwater Blocks 17 and 14.

The 2009 AAPG International Convention and Exhibition will be held in November in Rio de Janeiro. All indications are that an equally interesting and extensive array of presentations and field trips will be available to the attendees in Rio, 2009.

Koning, a former Exploration Director at Texaco and later Chevron, is a member of theeditorial advisory board of Africa Oil+Gas Report.

Angola will lead the Oil Producing and Exporting Countries OPEC from the front in January 2009, as the southwest African country is elected president of the cartel for the next one year.

Angola joined the influential group, which produces close to 40% of the world’s total output of crude oil, two years ago. It is the second consecutive African country to be president of the organisation and the third, in the last four years. Algeria presided over the cartel throughout 2008. Nigeria was the president in 2006.

The day to day implementation of the group’s policy is overseen by the Secretary General, who is essentially a technocrat. This time, he is also an African. Abdalla Sam El Badri is a 68 year old Libyan accountant who started his career spending 12 years with with ExxonMobil between 1965 and 1977.

In effect, Africa has run OPEC for the period of the highest crude oil prices in history.

The presidency of OPEC is not exactly an executive job and decision making is essentially consultative.

Still, the Angolans sound like they are making it personal. “The price of oil has reached levels that OPEC members want to see improve during our presidency,” Botelho de Vasconcelos said in comments broadcast on Radio Nacional de Angola in late December 2008.”We will try to maintain that stance,” he said,

OPEC oil ministers agreed their deepest output cut ever in mid- December 2008 cutting 2,2-million barrels per day from markets in a race to balance supply with rapidly dwindling demand for fuel.

The aim was to build a floor under prices that have dropped more than $100 from a July 2008 peak above $147 a barrel, to levels where the economies of several OPEC members are hurting.

As a new member that joined OPEC in 2007, Angola is expected to use the 12-month rotating presidency as a platform to spread its regional influence and shed an image of a country ruined by corruption and war.

The government of Angola is relying on an oil price above $55 per barrel to carry out a record $42billion spending plan in 2009.

The country emerged from nearly three decades of civil war as one of the world’s fastest growing economies due to surging oil output. Angola, dependent on oil for 90 percent of its income, produces around 1.8Million barrels of oil per day.

United Bank of Africa analyst Richard Segal said Angola was in a good position to set an example to OPEC members, some of which find difficulty in adhering to the group’s output cut decisions, as it has the flexibility to constrain production.

“Angola’s production costs are relatively low, its economy is stabilised at a lower oil price and it has a lot more oil production per capita than most other OPEC countries,” he said, adding it could also mediate between some of OPEC’s members.

“OPEC is a complicated organization …and even within the countries there are conflicting views — so the best Angola can do is provide leadership and play the role of a mediator.”

To the west Angola has the Gulf of Guinea, where it rivals Nigeria as Africa’s top oil producer. It is among the main oil exporters to China and the sixth biggest to the United States.

“We intend to dignify our country during the presidency,” said Botelho de Vasconcelos. “The presidency of OPEC is a mandate with big visibility and with a great deal of thought and some discretion, we will do our best”.

Algerian oil and gas revenue could reach a record high of $76billion in 2008, Energy and Mines Minister Chakib Khelil has been was quoted as saying. This compares favourably with $59billion in 2007. ‘The expected revenues of between $75billion and $76-billion are a record,” the official APS news agency quoted him as saying. Algeria’s state energy conglomerate Sonatrach earned $57billion in 2007 from producing and selling oil and gas, while the state earned a further $2billion from a windfall tax on the earnings of foreign energy firms operating in Algeria.

Khelil said in May 2008 that Sonatrach expected to earn about $81billion in 2008 if oil prices stayed high. Prices at the time were about $111 a barrel and have since collapsed to around $45.

British Petroleum, Amerada Hess, Statoil, Anadarko Petroleum Corp., Repsol and TOTALare the main foreign companies involved in exploration and production of hydrocarbons in Algeria.